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Contribution rates for Wisconsin Retirement System (WRS) employers and employees will increase in 2014, the Employee Trust Funds Board (Board) announced. The following rate increases were recommended by the WRS consulting actuary and approved by the Board on June 20:

0.7% of payroll for protective category employees covered by Social Security

1.7% of payroll for protective category employees not covered by Social Security

In general, the total contribution rate is split equally between the employee and the employer. This means general category employees will contribute .35% more in 2014. Executive/elected official/judge category employees will see an increase of .75%.

Why are contribution rates increasing?

While many complex factors affect WRS contribution rates, the increase is primarily due to the lingering effects of 2008’s global economic meltdown. 2014 is the last year that the investment declines will affect WRS contribution rates. Contribution rate changes, whether increases or decreases, are considered normal for retirement systems that have defined, or pre-funded, benefits.

Core Trust Fund investment results are distributed (“smoothed”) over five years to soften the impact of year-to-year volatility of investments. This also helps to keep WRS contribution rates stable. For example, over the past 25 years the rate for general category employees has deviated by just 2%.

The new rates (shown below) go into effect January 1, 2014. Rates may be different for employees who have collective bargaining agreements. Other mandatory employer contributions for duty disability, the state's Accumulated Sick Leave Conversion Credit Program, or unfunded liabilities are not included and vary by employer.